International Business Midterm
Which theory suggests that a country should export those goods and services for which it is more productive than other countries and import those goods and services for which other countries are more productive? comparative advantage mercantilism specialization of countries absolute advantage
Absolute advantage
Who proposed the theory of absolute advantage? Bertil Ohlin David Ricardo Adam Smith Raymond Vernon
Adam Smith
Which of the following statements is true of embargoes? An embargo may be placed on one or a few goods or may completely ban trade in all goods. An embargo is usually employed for economic reasons. Embargoes are used frequently today because they are easy to implement. An embargo is the least restrictive nontariff barrier available.
An embargo may be placed on one or a few goods or may completely ban trade in all goods.
Which factors of production did Leontief focus on? land and labor land and technology labor and technology capital and labor
Capital and labor
Which of the following is the most common form of social stratification in the world today? language-based stratification class system racial segregation gender-based division
Class system
Which of the following is a result of the protection of domestic companies from international competition? There are increased incentives to cut production costs and improve quality. Protection increases a company's incentives to obtain the knowledge it needs to become more competitive. Consumers need to pay less for products. Companies become more reliant on protection.
Companies become more reliant on protection.
Which of the following is a disadvantage of local requirement laws to foreign companies? They do not foster local business activity and increase regional and national unemployment. Companies required to hire local personnel might be forced to take on inadequately trained workers. The companies are forced to bring in raw material and workers from their own countries. They make it necessary for the government to resort to expropriation and confiscation.
Companies required to hire local personnel might be forced to take on inadequately trained workers.
When a country is not able to produce a good more efficiently than other nations but produces the good more efficiently than it does any other good, it is said to have a(n) ________. comparative advantage absolute advantage resource advantage first-mover advantage
Comparative advantage
Country A produces a ton of coffee using one unit of resources. Country B produces two tons of coffee using one unit of resources. Which of the following is true regarding Country A and Country B? Both Country A and Country B have an absolute advantage in producing coffee. Neither Country A nor Country B has an absolute advantage in producing coffee. Country B has an absolute advantage in producing coffee. Country A has an absolute advantage in producing coffee.
Country B has an absolute advantage in producing coffee.
________ is a political risk that affects only a specific firm or firms within a specific industry. Micropolitical risk Macropolitical risk Inclusive political risk Exclusive political risk
Exclusive political risk
Which of the following financial companies in the United States is involved in activities of selling of goods abroad, and offers insurance on foreign accounts receivable? Overseas Private Investment Corporation Export-Import Bank National Cooperative Bank Inter-American Development Bank
Export-Import Bank
Which element of national competitive advantage theory divides resources into two groups: basic and advanced? demand conditions firm, strategy, structure, and rivalry factor conditions related and supporting industries
Factor conditions
The ________ theory states that countries produce and export goods that require resources available in abundance and import goods that require resources in short supply. new trade international product life cycle factor proportions absolute advantage
Factor proportions
Which of the following accurately identifies a difference between GATT and the WTO? GATT rules did not cover trade in services, but the rules of the WTO do. GATT could enforce member compliance with agreements, but the WTO cannot. GATT withdrew the most-favored-nation clause, but the WTO reinstated it. At its inception, GATT had more member nations than the WTO currently has.
GATT rules did not cover trade in services, but the rules of the WTO do.
Which of the following is true of government interventions in a country's trade practices? Governments intervene to protect only imports, as the protection of exports is handled by private agencies. Government interventions help companies take advantage of economies of scale and be the first movers in their industries. Lower restrictions should be placed on products coming from countries where a government has a large sphere of political influence. A major political motive behind government intervention in trade is the protection of infant industries.
Government interventions help companies take advantage of economies of scale and be the first movers in their industries.
Which of the following terms refers to the broadest measure of economic development of a country? human development index (HDI) gross domestic product (GDP) purchasing power parity (PPP) gross national product (GNP)
Gross national product
Which of the following was originally created to regulate fixed exchange rates and enforce the rules of the International monetary system? World Trade Organization European Union World Bank International Monetary Fund
International Monetary Fund
Which of the following functions does a copyright perform? It protects the trade secrets of an organization, including its business plans. It prevents a company from monopolizing an invention. It distinguishes the product and manufacturers from competitors through distinct words and symbols. It gives creators of original work the freedom to publish or dispose of them as they choose.
It gives creators of original work the freedom to publish or dispose of them as they choose.
Both absolute and comparative advantage theories assume that ________ is the only resource used in the production process. land capital equipment labor
Labor
Most of the world merchandise trade is composed of trade in ________. Minerals Agricultural products Manufactured goods Services
Manufactured goods
The international product life cycle theory was put forth for ________. service goods abundant resources manufactured goods natural resources
Manufactured goods
Which of the following statements is true of national production? Per capita numbers provide a detailed picture of development of the entire country. Gross product figures accurately indicate whether a nation's economy is growing or shrinking. Marketers use GDP or GNP figures to determine whether a country's population is wealthy enough to purchase its products. Volunteer work and unpaid household work are considered in GDP and GNP.
Marketers use GDP or GNP figures to determine whether a country's population is wealthy enough to purchase its products.
During which stage of the international product life cycle theory does demand rise and remain sustained for a lengthy period of time? maturing product stage standardized product stage product decline stage new product stage
Maturing product stage
Nations following the theory of ________ believed that the world's wealth was limited and that a nation could increase its share of the pie only at the expense of its neighbors. absolute advantage mercantilism factor proportions comparative advantage
Mercanilism
________ says that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports. Absolute advantage theory Factor proportions theory Mercantilism Communism
Mercantilism
During which of the following stages of the international product life cycle theory does high purchasing power and buyer demand in an industrialized nation encourage a company to design and introduce a product concept? standardized product stage new product stage maturing product stage product decline stage
New product stage
Which of the following statements about approaches to political risk management is NOT true? Passive political risk management assumes that it is difficult, if not impossible, to systematically model political risk. Passive political risk management discourages managers from fully or partially hedging their bets against exposure to political hazards. Active political risk management assumes that positive and negative political events in any country are neither independent nor random events. Active political risk management assumes that political events unfold in observable patterns that statistical methods can detect.
Passive political risk management discourages managers from fully or partially hedging their bets against exposure to political hazards
Which of the following statements is true about the political risks in a global marketing environment? A country with high political risks attracts more investors. Political risk is a major deterrent for companies that want to invest abroad. The more a country is developed, the greater is the political risk. The political risk of low-income countries is lesser than high-income countries.
Political risk is a major deterrent for companies that want to invest abroad.
________ represents passive holdings of securities such as foreign stocks, bonds, or other financial assets. Capital investment Controlling ownership Portfolio investment Direct investment
Portfolio investment
Reverse brain drain is the process by which ________. students from Europe choose to enroll themselves in American universities companies in high-income countries hire people from low-income countries to fill white-collar positions professionals are lured back to their homeland manual laborers migrate from low-income countries to high-income countries
Professionals are lured back to their homeland
Under ________, the government endorses private ownership of property and a market-based economy but grants little or no political freedom. left-wing totalitarianism theocratic totalitarianism secular totalitarianism right-wing totalitarianism
Right-wing
________ is the layer of corporate social responsibility whereby a company develops a code of conduct that it will follow in its global operations and agrees to operate with greater transparency. Strategic Corporate Social Responsibility (CSR) Risk management Corporate Social Responsibility (CSR) Traditional philanthropy Task orientation
Risk management Corporate Social Responsibility (CSR)
In which stage of the international product life cycle does the innovating firm's country become a net importer of the product? new product stage maturing product stage never standardized product stage
Standardized product stage
________ is the layer of corporate social responsibility in which a business builds social responsibility into its core operations to create value and build competitive advantage. Risk management Traditional philanthropy Strategic Corporate Social Responsibility (CSR) Political polity
Strategic Corporate Social Responsibility (CSR)
Which of the following is an argument offered by the new trade theory? It is in line with the factor proportions theory. There are gains to be made from specialization and increasing economies of scale. Market forces alone play a role in assisting the home companies in a country. The companies first to market forgo the opportunities to create barriers to entry.
There are gains to be made from specialization and increasing economies of scale
Which of the following statements is true of attitudes? They are learned from role models. They are developed only for the most important aspects of life. Because they're formed within a cultural context, they mirror the attitudes of surrounding countries. Over the years, they become more rigid than values.
They are learned from role models
The ________ is an agency created to provide financing for national economic development efforts. Global Financial Markets Association World Trade Organization World Bank Financial Stability Board
World Bank
The ________ replaced the institution of GATT while retaining all of the former GATT agreements. Federation of International Trade Association International Monetary Fund Commonwealth of Nations World Trade Organization
World Trade Organization
Under the WTO agreement, ________. there is no dispute resolution mechanism except for trade involving environmental products countries are allowed to place trade barriers on member countries with no particular justification, because like GATT the WTO has no enforcement mechanism a dispute resolution mechanism allows countries to bring grievances to the WTO against countries that levy inappropriate trade discrimination measures tariffs are permitted to be levied by developed countries against developing countries but not against each other
a dispute resolution mechanism allows countries to bring grievances to the WTO against countries that levy inappropriate trade discrimination measures
The condition that results when a nation's exports are greater than its imports is called ________. a trade surplus mercantilism dumping a trade deficit
a trade surplus
Which of the following is NOT a likely reason to study international business? a. Business conducted outside the limits of any one country is inexplicably on the decline. b. Global events affect all companies c. Firms may be better able to obtain better or less expensive resources by operating internationally. d. Differences among countries in physical, social, and competitive conditions may cause companies to alter their operating methods from country to country.
a. Business conducted outside the limits of any one country is inexplicably on the decline
Which of the following best defines international business? a. It includes all business transactions involving two or more countries. b. It includes all business transactions in countries other than your home country. c. It includes all economic flows between two or more countries. d. It includes all private economic flows between two or more countries.
a. It includes all business transactions involving two or more countries.
The rise of a new international entity called the ______ suggests that any company, regardless of age, experience, and resources, can engage in international business. a. Born global firm b. Transnational corporation c. Multinational corporation d. Global firm
a. born global firm
Which of the following is an import tariff? sua sponte tariff complex tariff ad valorem tariff transit tariff
ad valorem tariff
Which of the following is a cultural component that implies gauging the beauty and appeal of artwork? Customs Folkways Aesthetics Mores
aesthetics
________ is the belief that only individuals and private groups should control a nation's political activities. Pluralism Anarchism Theocracy Totalitarianism
anarchism
The value of all goods and services produced by a country's domestic and international activities over a one-year period is the country's ________. a. Gross domestic product (GDP) b. Gross national product (GNP) c. Gross world product (GWP) d. Gross state product (GSP)
b. Gross national product (GNP)
The term ________ refers to entities cooperating across national boundaries. a. Supranationalism b. Internationalization c. Denationalization d. Multiculturalism
b. Internationalization
Olive oil prepared in a small Italian oil press factory and sold by large supermarkets in the United States is an example of a ______. a. Net national product b. U.S. Export c. U.S. Import d. Gross domestic product
b. U.S. Import
_____ are all goods and services sold abroad and sent out of a country. a. Imports b. Exports c. Net national products d. Gross domestic products
b. exports
A country's ________ is a summary of all economic transaction between one country and the rest of the world, over a given period of time. global financial system international monetary system balance of payments chart of accounts
balance of payments
Which of the following terms is used to refer to the exchange of goods and services for other goods and services instead of money? fiat money guanxi barter letter of credit
barter
Ethnocentricity can be defined as the ________. systematic study of an ethnic group's religious core scientific description of individual human societies belief that one's own ethnic group or culture is superior to that of others merging of all ethnic practices into one homogeneous culture
belief that one's own ethnic group or culture is superior to that of others
A business that has direct investments (in the form of marketing or manufacturing subsidiaries) abroad in several countries is called a _______. a. Domestic corporation b. Shell corporation c. Multinational corporation d. Dummy corporation
c. Multinational corporation
The ________ records transactions involving the purchase and sale of assets. current account official reserves account debt account capital account
capital account
Which of the following philosophies asserts that ownership of the means of production belongs in the hands of individuals and private businesses? capitalism communism tribalism socialism
capitalism
Economic transition is the process of moving from ________. developed to developing economies developed to emerging economies centrally planned to free-market economies free-market to centrally planned economies
centrally planned to free-market economies
Which of the following terms is used to refer to widespread job turnover throughout an economy? onboarding redeployment restructuring churning
churning
________ is a legal system which is based on a detailed set of written rules and statutes that constitute a legal code and it is also based on a codification of what is and is not permissible. international law civil law tribal law common law
civil law
In a ________ government, the strongest political parties share power by dividing government responsibilities among themselves. coalition bilateral totalitarian theocratic
coalition
In Country X, all dimensions of economic activity, including pricing and production decisions, are determined by the central government. Which term best describes Country X? market economy mixed economy command economy democratic economy
command economy
_______ is based on the cumulative wisdom of judges' decisions on individual cases through history. common law civil law statutory law bureaucratic law
common law
A(n) ________ tariff (or duty) is levied on an imported product and calculated partly as a percentage of its stated price and partly as a specific fee for each unit. ad valorem compound specific transit
compound
Which results in a loss of assets, without compensation? confiscation inflation expropriation repatriation
confiscation
As former competitors in many industries link up to challenge others on a worldwide basis, ________ occurs. technological stagnation denationalization segregation consolidation
consolidation
A greenfield investment is another name for a company's decision to ________. build a facility for a local company acquire an interest in an existing foreign operation implement sustainable marketing practices construct a new facility in a foreign market
construct a new facility in a foreign market
In a market economy, the patterns of resource allocation are most directly influenced by ________. government administrators who monitor the equilibrium of supply and demand industry coalitions that strive to improve the efficiency of production and service consumer group alliances that negotiate with firms to improve product quality consumers who "vote" by their personal decision to buy or not buy products
consumers who "vote" by their personal decision to buy or not buy products
Which of the following do governments impose upon people to help pay for the consequences of using a particular product? income taxes consumption taxes property taxes value-added taxes
consumption taxes
A(n) ________ is calculated to offset the advantage an exporter receives from a subsidy. export promotion countervailing duty compound tariff substitution tariff
countervailing duty
Cultural change occurs when people integrate into their culture the gestures, material objects, traditions, or concepts of another culture through ________. ethnocentrism social stratification cultural diffusion xenocentrism
cultural diffusion
Critics of globalization say that global consumer-goods companies destroy ________. societal conformity the homogenization of markets free trade areas cultural diversity
cultural diversity
________ refers to the replacement of one culture's traditions, folk heroes, and artifacts with equivalents from another. Social conditioning Cultural encoding Cultural imperialism Social stratification
cultural imperialism
________ refers to the unwanted cultural influence in a nation that can cause great distress and lead governments to block imports it believes to be harmful. Cultural protectionism Capitalism Dumping Cultural imperialism
cultural imperialism
Detailed knowledge about a culture that enables people to work happily and effectively within it is called ________. cultural diffusion cultural literacy cultural imperialism cultural divergence
cultural literacy
The ________ view states that a company should adopt local ethics wherever it operates because all belief systems are determined within a cultural context. Friedman cultural relativist righteous moralist utilitarian
cultural relativist
A(n) ________ is anything that represents a culture's way of life, including gestures, material objects, traditions, and concepts. social status social structure cultural trait cultural baggage
cultural trait
________ consists of specific learned norms based on attitudes, values, and beliefs of a group Culture Ethnology Civilization Doctrine
culture
________ make it more difficult for importers of nonessential goods to acquire foreign exchange. Numerical export controls Currency controls Restricted access to distribution networks Public-sector procurement policies
currency controls
The ________ records exports and imports of goods and services, investment income, and gifts. official reserves account debt account current account capital account
current account
Which of the following occurs in a country's balance of payments when a country exports more goods and services and receives more income from abroad than it imports and pays abroad? capital account surplus current account surplus capital account deficit current account deficit
current account surplus
Which of the following refers to the use of computer networks to purchase, sell, or exchange products; service customers; and collaborate with partners? a. Data virtualization b. Virtual hosting c. Telecommuting d. E-commerce
d. E-commerce
Goods and services purchased abroad and brought into a country are called ________. a. Gross national products b. Gross domestic products c. Exports d. Imports
d. Imports
Most companies today operate in an environment of increased transparency and scrutiny regarding their business activities. This is due to ________. a. Labor market flexibility in developing nations b. The heterogeneity in markets c. The prosperity of developing nations d. The rise of the social media
d. The rise of social media
Which of the following has NOT been a major force increasing globalization in recent decades? increase in and expansion of technology liberalization of cross-border trade growing pressure from consumers decreasing prices of natural resources
decreasing prices of natural resources
A ________ is a political system in which government leaders are elected directly by the wide participation of the people or by their representatives. democracy theocracy plutocracy autocracy
democracy
An established consumer market that primarily comprises the middle class and possesses efficient infrastructure is characteristic of ________ markets. Frontier Traditional Emerging Developed
developed
________ can occur when a firm sells its goods in a foreign market at a price below what it charges in its home market. Foreign trade duties Predatory pricing Dumping Subsidies
dumping
________ can occur when a firm sells its goods in a foreign market at a price below what it charges in its home market. Foreign trade duties Predatory pricing Subsidies Dumping
dumping
Today, countries seen by others as trying to maintain a trade surplus and expand their national treasures at the expense of other nations are accused of practicing ________. economic nationalism social stratification anti-mercantilism totalitarianism
economic nationalism
________ is the process by which a nation changes its fundamental economic organization and creates new free-market institutions. Economic liberalism Industrialization Central planning Economic transition
economic transition
A(n) ________ is an absolute ban on the exporting and importing of goods to a particular destination. tariff rate quota ad valorem tariff voluntary export restraint embargo
embargo
________ markets are characterized by the rural population migrating to cities for better pay and thus, overloading cities' infrastructures. Virtual Developed Emerging Traditional
emerging
Local content regulations are primarily intended to ________. assess local tax rates on MNEs encourage MNEs to increase production activities in a country address cultural differences between local employees and expatriates address contract negotiation difficulties
encourage MNEs to increase production activities in a country
Which of the following is an important factor in forming successful business ventures in China? following the strategies of western countries for establishing business relationships focusing on establishing tight formal contracts giving high importance to written contracts establishing a trusting relationship before proceeding with business
establishing a trusting relationship before proceeding with business
The importance of trade for a nation can be measured by ________. the number of acquired territories the nation has that serves as sources of inexpensive raw materials the living standards of people involved in only trade activities examining the volume of its trade relative to its total output examining the amount of wealth acquired by the national government through restrictive trade policies
examining the volume of its trade relative to its total output
Globalization is criticized because it ________. prevents developed countries from outsourcing work to developing nations creates fewer manufacturing jobs in developing nations does not generate labor market flexibility in developing nations exploits workers in low-wage nations
exploits workers in low-wage nations
Which of the following is an instrument that governments use to promote trade? embargoes export financing administrative delays tariffs
export financing
A special region in which companies can engage in tariff-free importing and exporting is called a(n) ________. economic union preferential trade area export-processing zone customs union
export-processing zone
________ is the forced transfer of assets from a company to the government with compensation. Expropriation Nationalization Localization Confiscation
expropriation
Nepotism often prevails in ________ cultures. nuclear family monotheistic individualistic extended-family
extended-family
Which of the following methods is being used when a host country provides lower tax rates and low-interest loans to firms from abroad for encouraging inflows of foreign direct investment? financial incentives sanctions embargoes local content requirements
financial incentives
Which type of investment involves the acquisition of foreign assets for the purpose of controlling them? capital investment foreign direct investment controlling ownership foreign portfolio investment
foreign direct investment
Which of the following is recorded in the capital account of a country's balance of payments? income receipts income payments unilateral transfers foreign official assets
foreign official assets
A(n) ________ is a geographic area where imported or exported goods receive preferential tariff treatment. foreign trade zone free trade zone fair trade zone economic incentive zone
foreign trade zone
The extension of a company's activities into stages of production that absorb the company's outputs is known as ________. forward integration backward integration an ownership advantage an internalization advantage
forward integration
________ refers to socially learned traits associated with, and expected of, men or women. Individualism Conformity Gender Social mobility
gender
Which of the following is a major driver of foreign direct investment? cultural diversity globalization vertical integration horizontal integration
globalization
________ is increasing the pace of both cultural diffusion and cultural change. Collectivism Fundamentalism Globalization Enculturation
globalization
The term protectionism, when applied to international trade, refers to ________. methods used to prevent intellectual property theft border checks to prevent entry of illegal aliens governmental restrictions and competitive support actions to affect trade flows payments to dock workers to prevent pilferage of imported shipments
governmental restrictions and competitive support actions to affect trade flows
The measure of the value of production that occurs within a country's borders without regard to whether the production is done by domestic or foreign factors of production is its ________. gross domestic product (GDP) gross national income (GNI) gross national product (GNP) net national product (NNP)
gross domestic product
The Uruguay Round of Negotiations created the TRIPS Agreement to ________. drastically reduce tariffs and nontariff barriers in agricultural trade include international trade in services for the first time help standardize the intellectual property rules around the world increase the exposure of national agricultural sectors to market forces
help standardize the intellectual property rules around the world
The term "________ culture" describes a country in which the norm is a money-and-things orientation and a belief that it's better to "live to work" than to "work to live." high masculinity non-fatalistic high-femininity physiological
high masculinity
Most of the total world merchandise trade occurs among ________. emerging markets high-income economies newly industrialized countries middle-income and low-income economies
high-income economies
Which of the following measures the extent to which a government equitably provides its people with a long and healthy life, an education, and a decent standard of living? human development index gross national product index purchasing power index category development index
human development index
Free trade ________. proposes that national governments should directly help domestic firms by providing export subsidies and tax breaks implies that the national government exerts minimal influence on the exporting and importing decisions of private firms suggests that the national government should actively intervene to ensure that domestic firms' exports receive an equitable share of foreign markets and that imports are controlled to minimize losses of domestic jobs and market share in specific industries is another term for managed trade
implies that the national government exerts minimal influence on the exporting and importing decisions of private firms
The most common tariffs used today are the ________ tariffs. export import transit inverted
import
Supporters affirm that globalization ________. brings an end to practices like outsourcing causes worker dislocation that gradually lowers wages increases wealth and efficiency in all countries curbs market flexibility in developed nations
increases wealth and efficiency in all countries
In ________ cultures, economic systems tend to provide incentives and rewards for a person's private business initiatives. individualist High uncertainty avoidance feminine large power distance
individualistic
________ cultures value hard work and promote entrepreneurial risk taking. Collectivist Individualist Short-term oriented High uncertainty avoidance
individualistic
According to the ________ argument, as an industry grows and matures, it gains the knowledge it needs to become more innovative, efficient, and competitive. infant industry developing economy maturing industry standardized product
infant industry
A(n) ________ advantage is the one that a company gains from incorporating a business activity within itself rather than leaving it to a relatively inefficient market. comparative location ownership internalization
internalization
Which theory explains why a firm would choose to enter a foreign market via FDI rather than exploit its ownership advantages internationally through other means? eclectic theory national competitive advantage internalization theory relative factor endowments
internalization theory
The ________ theory states that a country's export eventually becomes its import. international product life cycle factor proportions competitive advantage new trade
international product life cycle
The term ________ refers to the voluntary exchange of goods, services, assets, or money between one person or organization and another across national borders. strategic management transaction international trade sales
international trade
________ is crucial in production facilities where nonnative managers supervise local employees. Individualism Cultural isolation Language proficiency Ethnocentrism
language proficiency
Lingua franca means ________. French language official language Latin language link language
link language
The theory of absolute advantage measures a nation's wealth by determining the ________. total trade volume in the country living standards of its people amount of gold it has on reserve quantity of minerals it has on reserve
living standards of its people
The purpose of ________ is to force companies from other nations to use local resources in their production processes, particularly labor. currency controls voluntary export restraints administrative delays local content requirements
local content requirements
According to Hofstede's framework, a culture that scores low on ________ can change more rapidly because tradition and commitment are not impediments to change. masculinity long-term orientation risk-taking individualism
long-term orientation
The smallest portion of the total world trade comprises trade between ________. high-income and middle-income nations low-income and middle-income nations developed countries First World member countries
low-income and middle-income nations
Trade unions claim that by permitting international firms to continually move to nations with ________, globalization reduces labor's bargaining power and forces overall labor standards higher resource accessibility better factory facilities lower labor density lower labor standards
lower labor standards
The ________ theory states that when an aspect of the market makes a transaction less efficient than it could be, a company will undertake foreign direct investment to internalize the transaction and thereby remove the efficiency-reducing aspect. international product life cycle market imperfections eclectic market power
market imperfections
The ________ theory states that a firm tries to establish a dominant presence in an industry by undertaking foreign direct investment. market imperfections electric international product life cycle market power
market power
________ is often used to measure the technological advancement of a nation's markets or industries. Material culture Vernacular culture Trash culture Popular culture
material culture
According to the international product life cycle theory, in which stage of a product's life cycle does a company directly invest in production facilities in countries where demand is great enough to warrant production facilities? standardized product stage declining product stage maturing product stage new product stage
maturing product stage
Which of the following is an assumption made by the comparative advantage theory? creation of trade deficits creation of trade surpluses government interference and control in trade activities maximization of production and consumption
maximization of production and consumption
Exports and imports of tangible goods are included in the ________ account of a country's balance of payments. merchandise services capital savings
merchandise
Democracies try to preserve peaceful coexistence among groups of people with diverse cultural, ethnic, and racial backgrounds. These rights are known as ________ rights. indirect central subcapital minority
minority
The French Government promotes the concept of ________ by building museums and monuments to preserve the legacies of important events and people. National culture Popular culture Monoculture Subculture
national culture
________ involves the idea that a nation-state is autonomous, cannot intervene in the affairs of other nations, and can enter into binding international agreements. National sovereignty Authoritarianism Communalism Cultural liberalism
national sovereignty
________ refers to the transfer of ownership of resources from the private to the public sector. Nationalization Conversion Federalization Expropriation
nationalization
________ refers to the transfer of ownership of resources from the private to the public sector. Nationalization Expropriation Federalization Conversion
nationalization
According to the international product life cycle theory, in which of the following stages is a good produced in the home country because of uncertain domestic demand and to keep production close to the research department? declining product stage standardized product stage maturing product stage new product stage
new product stage
The realization that companies can start production in the most efficient and productive locations in the world and export to markets worldwide led to a new surge of foreign direct investment into ________. high-income nations low-income nations First World nations newly industrialized nations
newly industrialized nations
________ place limits on the quantity of a product being imported. Nontariff barriers (Quotas) Embargoes Anti-dumping duties Trade blocs
nontariff barriers (quotas)
Business people seeking to understand more about another culture in order to successfully conduct business within that culture would be best advised to do which of the following? avoid cultural research studies because they perpetuate unjustified stereotypes and behaviors memorize the cultural variations that are typically encountered in a specific cultural environment observe the behavior of people who have gained respect within that cultural environment rely on stereotypes, which are based on averages, to gain an understanding of the culture
observe the behavior of people who have gained respect within that cultural environment
Which of the following is a form of foreign direct investment? participating a contract manufacturing arrangement participation in a joint venture foreign bond ownership mutual fund ownership
participation in a joint venture
A ________ is a right granted to the inventor of a product or process that excludes others from making, using, or selling the invention. patent trademark watertight copyright
patent
A caste system is a system of social stratification in which ________. a person's position in society depends upon his educational qualifications and achievements a person's social status is decided by his acquired wealth people are born into a social ranking, with no opportunity for social mobility people join highly exclusive associations that encourage external interaction
people are born into a social ranking, with no opportunity for social mobility
Guanxi, in the Chinese business context, means ________. personal relationships bribing government officials preference for communism manufacturing inexpensive products
personal relationships
________ is the belief that both private and public groups play important roles in a nation's political activities. totalitarianism Capitalism Anarchism Pluralism
pluralism
Which of the following is used by home-country governments to promote outbound foreign direct investment? ownership restrictions performance demands political pressure sanctions
political pressure
Country risk is considered similar to ________. currency risk cross-cultural risk commercial risk political risk
political risk
________ is the chance that political forces may change a country's business environment in ways that lead investors to lose some or all the value of their investment or be forced to accept a lower-than-projected rate of return. Political risk Governmental risk Operating risk Transaction risk
political risk
Folk customs that spread by cultural diffusion to other regions develop into ________ Superstitions Trash culture Traditions Popular customs
popular customs
When there are gains to be had by both countries that are party to an exchange, international trade is considered a(n) ________. positive-sum game equal-sum game negative-sum game zero-sum game
positive-sum game
According to Hofstede's framework, people generally prefer little consultation between superiors and subordinates in cultures where ________ is high. fatalism self-actualization Power distance individualism
power distance
The segment of the economic environment comprising independently owned firms that seek to earn profits is called the ________. political sector private sector democratic sector public sector
private sector
The purpose of the General Agreement on Tariffs and Trade (GATT) was to ________. create an international currency regulate exchange rates promote free trade create regional trade organizations
promote free trade
Which of the following is the main cultural motive behind government intervention in trade? protection of young industries from competition protection of national identity promotion of strategic trade policies protection of jobs
protection of national identity
SJC Enterprises, a global firm, operates a facility in Angola. Managers want to reduce the firm's vulnerability to political risk in Angola. All the following actions would most likely accomplish this task except ________. being a good corporate citizen buying inputs from local suppliers purchasing capital equipment outright reducing net investment in the subsidiary
purchasing capital equipment outright
The relative ability of two countries' currencies to buy the same basket of goods in those two countries is called ________. gross domestic product purchasing power gross national product purchasing power parity
purchasing power parity
A ________ is a numerical limit on the quantity of a good that may be imported into a country during some time period. regulatory control voluntary export restraint numerical export control quota
quota
A system of production in which each of a product's components is produced in the location where the cost of producing that component is lowest is called ________ production. job customized craft rationalized
rationalized
Which of the following would most likely be used as a subsidy to entice firms to locate or expand facilities in a community? quotas a granting of corporate citizenship status reduced utility rates an embargo
reduced utility rates
Exports and imports of tourism and business consulting are included in the ________ account of a country's balance of payments. savings services capital merchandise
services
Whereas relocating production to low-cost locales traditionally meant production of goods almost exclusively, it increasingly applies to the production of ________. Domestic products Services Global brands Perishables
services
One of the main goals of the World Trade Organization is to ________. encourage dumping among trading nations settle trade disputes among its members provide favorable terms of trade to a few selected countries restrict the free flow of trade
settle trade disputes among its members
Religion ________. shapes the attitudes its adherents have toward work, consumption, individual responsibility, and planning for the future is the overall framework that determines the roles of individuals within a society, the stratification of the society, and the individuals' mobility within the society remains one of the least important elements of culture is the exclusive means by which a society's members communicate with each other
shapes the attitudes its adherents have toward work, consumption, individual responsibility, and planning for the future
The balance of payments is useful to international business people for which of the following reasons? warning of new policies that could affect a country's business climate signaling increased riskiness of lending to countries predicting future technological changes indicating stability in a country's foreign policy
signaling increased riskiness of lending to countries
________ is a system in which a supervisor walks an employee through every step of an assignment or task, monitoring the results at each stage. Social stratification Situational management Social mobility Situational attribution
situational management
________ is the ability of individuals to move from one stratum of society to another. Socialization Hierarchical structure Social Stratification Social mobility
social mobility
Which of the following terms refers to an economic system in which the government owns and controls all types of economic activity? socialism sovereign nationalism political bureaucracy Pluralism
socialism
A foreign trade zone is primarily used by governments to ________. spur economic development monitor foreign investments enforce tariffs and duties protect currency rates
spur economic development
In which stage of the international product life cycle does the innovating firm's country become a net importer of the product? maturing product stage new product stage standardized product stage never
standardized product stage
Which of the following is defined as a group of people who share a unique way of life within a larger, dominant culture? monoculture cultural universal subculture macroculture
subculture
_______ are those that use outdated and obsolete technologies or employ low-wage workers with few skills. Business-agile enterprises Greenfield investments Shell corporations Sunset industries
sunset industries
Firms engage in FDI when the firms they supply have already invested abroad. This practice of "following clients" is observed in industries having ________. suppliers who are geographically scattered around the world a huge number of clients only large companies as clients suppliers who have close working relationships with producers
suppliers who have close working relationships with producers
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs indicates ________. Sustainability Denationalization Generalizability Egalitarianism
sustainability
A(n) ________ imposes a low tariff rate on a limited amount of imports of a specified good but imposes a prohibitively high tariff on the good above that limited amount. tariff rate quota voluntary export restraint numerical export control ad valorem tariff
tariff rate quota
Which of the following will add to the cost of an imported product by levying an additional tax upon it? tariffs local content requirements quotas embargoes
tariffs
According to the Porter diamond, which of the following is an example of an advanced factor? natural resources in the nation climate in the nation technological infrastructure in the nation labor forces in the nation
technological infrastructure in the nation
Two major forces that underlie the expansion of globalization are falling barriers to trade and investment, and ________. Rise of closed economics Political stagnation Technological innovation Elevation of nationalism
technological innovation
A home country encourages outflows of foreign direct investment because it ________. sends resources out of the home country tends to increase the long-term competitiveness of firms takes the place of all the exports and imports in the country helps in replacing jobs at home
tends to increase the long-term competitiveness of firms
National competitive advantage theory states that a nation's competitiveness in an industry depends on ________. the availability of government subsidies for industry development the capacity of the industry to innovate and upgrade the availability of cheap factors of production in the nation the capacity of companies to create barriers to entry
the capacity of the industry to innovate and upgrade
Which of the following is an example of a greenfield investment? a merger between a U.S. and a non-U.S. company an agricultural business acquisition in South-east Asia's former agricultural region the construction of an entirely new steel manufacturing subsidiary overseas the purchase of an existing business that is still in its infancy
the construction of an entirely new steel manufacturing subsidiary overseas
A ________ is a political system in which a country's religious leaders serve as its political leaders. democracy theocracy plutocracy septocracy
theocracy
Which of the following is least likely a reason for companies to seek cross-border mergers and acquisitions? to raise company budgets for increased research and development activities to get a foothold in new geographic markets to increase a firm's global competitiveness to fill the gaps in companies' product lines in a global industry
to raise company budgets for increased research and development activities
Which of the following political ideologies states that every aspect of people's lives must be controlled for a nation's political system to be effective? totalitarianism capitalism anarchism pluralism
totalitarianism
Managers should understand the effect of trade protectionism because ________. trade protectionism may limit the number of people permitted to practice a specific profession trade protectionism may make it difficult for a company to buy what it needs from foreign suppliers trade protectionism may prevent companies' enactment of merger and acquisition agreements trade protectionism requires the payment of high insurance rates to transport goods internationally
trade protectionism may make it difficult for a company to buy what it needs from foreign suppliers
Shimmer and Sparkle is an American jewelry store which discovers that several shops in developing countries are selling counterfeited necklaces under their name and label. Which of the following problems are they facing? patent expiration trademark infringement copyright expiration monopolization
trademark infringement
________ is the layer of corporate social responsibility whereby a corporation donates money and, perhaps, employee time toward a specific social cause. Risk management Strategic Corporate Social Responsibility (CSR) Socialist Corporate Social Responsibility (CSR) Traditional philanthropy
traditional philanthropy
Expropriation is best defined as the ________. transference of ownership of resources from private to public sector with no compensation transference of ownership from private to public sector with compensation to private owners for their losses conversion of state-owned property to privately owned property conversion of state-owned property to privately owned property with no compensation
transference of ownership from private to public sector with compensation to private owners for their losses
According to Hofstede's framework, managers should be more precise in their directions to subordinates when ________. the company has a philosophy of geocentrism the society believes age equals wisdom power distance is low uncertainty avoidance is high
uncertainty avoidance is high
Which of the following philosophies maintains that a company should maximize "good" outcomes and minimize "bad" outcomes wherever it operates? Friedman view righteous moralist view cultural relativist view utilitarian view
utilitarian view
It is most accurate to say that within most nations' borders, people largely share such essential attributes as ________ and ________. values; language education level; ethnicity lifestyles; education level work attitudes; occupations
values; language
Coca-Cola has collaborative arrangements whereby it produces concentrate that it sells to other companies to bottle its drinks. Which of the following terms best describes this type of arrangement? link alliance scale alliance vertical integration horizontal integration
vertical integration
Countries might impose a(n) ________ in response to the threat of an import quota or total ban on a product by an importing nation. ad valorem tariff voluntary export restraint compound tariff embargo
voluntary export restraint
